Managing Physician Compensation Through a Pandemic

Considerations for Physician Compensation in the Wake of the COVID-19 Outbreak

In times of significant economic uncertainty, health system leadership will be concerned with how the downturn might impact their employed physician provider base and the local communities they serve. While the healthcare industry has fared better than others during prior economic downturns, the current Coronavirus (“COVID-19”) pandemic brings unique risks that could significantly impact physicians and other healthcare providers.

This article provides considerations for health system leadership as they navigate physician coverage and compensation issues during this time.

Ensure Proper Coverage

A familiar concept many have encountered is to “flatten the curve.” Even with a flattened curve, experts believe there is a real possibility the U.S. health care system will be pushed to the limit. Hospital beds will be full and equipment will be in short supply – health systems need to have an all hands-on deck mentality to meet the increased demand.

Physicians are obviously not immune from COVID-19. Some are going to get sick, some are going to need to stay home to be with children or other dependents  (especially in areas that have not offered free access to childcare for health workers). And with the constant evolution of the outbreak, there may be other factors not yet predicted.

There are key actions to help ensure needed coverage is available:

• Assess current coverage contracts (shift work, on-call, and others) to determine how quickly employed and non-employed physicians can be engaged to help fill coverage gaps.
• Work with clinical and physician leadership to determine the impact on physician schedules. For example, are 25% of patients cancelling upcoming appointments? 50% or more? These leaders can help determine what physician access looks like during this time.
• Work with physician leadership to determine which physicians within the organization can be recruited to help treat patients during the outbreak. This step can be guided by the knowledge gained during step one.
• Engage advanced practice clinicians (“APCs”) and assess how they may be leveraged during this time. Nurse practitioners and physician assistants are often not utilized at a level that reflects top of licensure.
• Consider what incentives and/or additional shift compensation can be provided to providers going above and beyond their standard schedules.

Look for Those Most Greatly Impacted

Most physicians in the market are paid on compensation design models that heavily weigh personally performed work relative value units (“RVUs”) and/or professional net collections. While some providers may continue to generate similar (or perhaps even higher) levels of productivity, others may struggle and show anxieties about future compensation considering decreased production.

Surgeons and other proceduralists may be the most impacted by COVID-19. The U.S. Coronavirus task force announced during a White House press conference on March 17 that doctors and dentists should avoid performing elective surgeries during the pandemic, as did the American College of Surgeons. While some of these providers may be able to repurpose their schedules, others might not be able to do so as easily.

There are a few steps health system leadership can take to assess whether action should be taken to protect these individuals and ensure future provider retention.

• Engage with physician leaders to determine which specialties and/or physicians may be most impacted.
• Review productivity reports regularly (monthly may not be frequently enough) to see which providers are impacted.
• Consider making temporary changes to the physician compensation plan design to ensure some level of comparable income for these harmed individuals. Changes could include shifting more of the compensation model to a guaranteed base salary versus work RVU productivity or implementing compensation guardrails that ensure physician compensation can only increase or decrease by a certain percentage in 2020.

Prepare for the Future

Most importantly, the COVID-19 pandemic gives health systems an opportunity to consider their current approach to physician and APC compensation. Even before COVID-19, with changes to reimbursement moving from volume to value, health systems have been adjusting compensation plans to decrease the emphasis on productivity and increase the emphasis on quality and other performance-based metrics. In the wake of the COVID-19 pandemic, there exists a potential for further movement in this direction.

Organizations may consider placing a greater emphasis on base salary and quality, and a smaller emphasis on productivity. Movements towards an accountable base salary approach, which provides a tiered level of base salary for a range of productivity levels, with added incentives for quality and other performance metrics are likely. For hospital-based physicians that tend to be on the front lines of similar outbreaks, organizations may consider implementing shift-based compensation models that make it simpler for leadership to scale the workforce to meet increased (or decreased) demand.

Conclusion

By ensuring proper levels of coverage, making additional considerations for those physicians and APCs most impacted by an outbreak, and reviewing compensation plans more globally to prepare for the future, organizations can set themselves up for current and future success during an uncertain time.